11M disbursed FDI at $16.5 bn

FDI projects disbursed $16.5 billion in capital in the first eleven months of 2018, up 3.1 per cent against the same period in 2017, according to the latest report from the Ministry of Planning and Investment (MPI) released on November 26.

Total newly-registered and additional capital and capital contributions and shares purchased by foreign investors stood $30.8 billion in the period, equal to 93.2 per cent of the figure in the same period of 2017.

As at November 20, 2,714 new projects had been granted investment licenses this year with total newly-registered capital of $15.78 billion, equal to 79.7 per cent of the figure in the same period of 2017, and 954 projects added capital to the tune of $7.4 billion, equal to 92.6 per cent of the figure in the same period of 2017.

There were 5,882 instances of capital contributions and share purchases by foreign investors in the period, with capital contributions standing at $7.6 billion, up 44.4 per cent year-on-year.

Eighteen fields received investment from foreign investors in the period, in which processing and manufacturing attracted much attention, with total capital of $14.2 billion, accounting for 46.2 per cent of total registered investment capital. Real estate ranked second, with $6.5 billion, accounting for 21.3 per cent, then wholesale and retail, with $3.1 billion, or 10 per cent.

There are 108 countries and territories with investment projects in Vietnam this year. Japan led the way, with nearly $8 billion, making up 25.9 per cent of the total. South Korea followed, with $6.8 billion, or 22.3 per cent, then Singapore with $4.1 billion, or 13.4 per cent.

Fifty-nine cities and provinces received investment in the period, in which Hanoi attracted the most, with $6.3 billion, or 20.4 per cent of the total. Ho Chi Minh City ranked second, with $5.6 billion, or 18.1 per cent, then northern Hai Phong city, with $2.49 billion, or 8 per cent.

As at November 20, Vietnam has 27,065 valid projects with total registered capital of $337.8 billion. Disbursed capital totals an estimated $188.8 billion, or 55.8 per cent.

Foreign investors have invested in 19 out of 21 sectors, in which processing and manufacturing accounted for the highest, with $193.6 billion, making up 57.3 per cent of the total, followed by real estate with $57.9 billion, or 17.1 per cent, then the production and distribution of electricity, gas and water, with $22.8 billion, or 6.7 per cent.

There are 129 countries and territories with valid investment projects. South Korea ranks first, with $62.2 billion, or 18.4 per cent of the total. Japan followed, with $56.4 billion, or 16.7 per cent, followed by Singapore, Taiwan, the British Virgin Islands, and Hong Kong.

FDI projects are found in all 63 cities provinces around the country, in which Ho Chi Minh City continues to rank first, with $44.9 billion, or 13.3 per cent of the total, followed by Hanoi with nearly $33 billion, or 9.7 per cent, and southern Binh Duong province, with $31.4 billion, or 9.2 per cent.

Exports by the foreign-invested sector (including crude oil) was $160.3 billion, up 13.4 per cent year-on-year and accounting for nearly 71.7 per cent of total export turnover. Exports excluding crude oil stood at $158.3 billion, up 14 per cent year-on-year and accounting for 70.7 per cent of the total.

Imports by the FDI sector were $130.1 billion, up 12.3 per cent year-on-year and capturing 60 per cent of total import turnover. The FDI sector therefore recorded a trade surplus of $30.1 billion including crude oil and $28.1 billion excluding crude oil.

According to MPI, the current trade tensions between the US and China may possibly affect foreign investment in Vietnam in the time to come. The US’s imposition of tariffs on Chinese goods could lead to investment moving from China to more stable countries.

With advantages in geographic location and policies, Vietnam may be a priority when investment is moved from China. This is both an opportunity and a challenge for the country, as it will need to adopt cautious tactics in granting and controlling investment, be selective, avoid any exploitation of policies for tax evasion, and avoid the imposition of tariffs, as happened in the steel industry, affecting not only Chinese enterprises investing in Vietnam but also manufacturing and exporting enterprises in Vietnam.